Washington has its White House, Venice its Campanile, and—in another grand reconstruction—Berlin will soon have its 18th-century palace.

After much contention and delay, the Hohenzollern Palace, seat of Prussia's monarchy and the jewel in the city's crown until the East Berlin regime leveled the building in 1950, has begun rising again.

The interior of the Schloss, or Palace, as it is known, will be modern and will house university facilities, a museum and a library. Its eastern facade, overlooking the Spree river, will also be contemporary.

But it is the palace's remaining outer walls, with their historical ornaments, that have generated the most controversy: Off-site sculptors are crafting an exact replica of the palace's baroque facade as it was before World War II.

Berlin is joining the ranks of cities whose most famous architectural landmarks are in fact reconstructions of lost originals with the rebuilding of Hohenzollern Palace, the seat of Prussia's monarchy. But the plan is not without controversy.

Since Wilhelm von Boddien, a Hamburg businessman with an aristocratic background, first floated the idea of rebuilding the Schloss in 1991, progressive architects have attacked the plan as reactionary, while fiscal conservatives balked at the €590 million ($788 million) bill. It took two votes in parliament, in 2002 and 2007, and the decision that the €80 million facade would be financed by private donations, to tame the discussion. Now builders are finally erecting the core of the palace on the city's Museum Island, Berlin's historic center, as nearly two dozen artisans work to recreate the facade and courtyard piece by piece.

As there are no original plans from Andreas Schlüter—court architect to Frederick I, whose baroque design updated the 15th-century castle—sculptors rely upon a variety of clues.

"We have to work on the basis of photos, fragments and bills," said Bertold Just, who runs the studio in charge of stonemasons. He adds that one of the most satisfying aspects of the project is how the building is taking shape through the sculptures that form the building's face.

"The visual language, the methods of working, which tools they had—it's like stepping into history," says Mr. Just from the studio on the outskirts of Berlin.

Photos: Rebuilding a Berlin Palace

The Hohenzollern Palace, damaged in aerial bombings during World War II and leveled by the East Berlin regime, has begun rising again. See photos of the damage the palace sustained and renderings of the new structure. Hulton Archive/Getty Images

Although aerial bombing badly damaged the Schloss during World War II, the royal seat was hardly beyond repair when it was dynamited by the East German authorities to make way for the Palace of the Republic. Before that demolition, original fragments were salvaged and stored in museums; others were foraged by passersby and kept in gardens and basements in East Berlin.

Some people, after they heard about the reconstruction, came forward with sections, Mr. von Boddien says. Significant pieces earned a financial reward.

The sculptors actually do the work four times over. A scale model of an element, known as a bozzetto, is created for approval by an expert commission. Next comes a life-size duplicate in clay. A plaster cast is then made—the model from which the final decoration is hand-carved in sandstone. The list of 2,800 ornaments includes reliefs, elaborate portals, balustrades, columns, ram's heads, sea shells, Roman gods, eagles and crowns.

The Schloss, scheduled to open in mid-2019, poses "challenges with regard to deadlines," says Mr. Just. Sculpting just one of the 43 eagles that will adorn the building takes over a month in clay and two months in sandstone.

Surprisingly, the end of the Cold War made finding qualified craftsmen less than problematic: German reunification provided a glut of restoration projects in cities that had been Communist—the former East Berlin, Potsdam, Dresden—which gave rise to a new generation of stonemasons.

Questions remain as to whether the organizers will raise enough to finance the facade. About half the budget has been collected so far, including €750,000 from U.S. donors. (Honorary members of the Schloss's U.S. board include George Bush Sr. and Henry Kissinger.) Mr. von Boddien, now director of the fundraising association, is optimistic.

"When we first said we wanted to build the palace, everyone said, 'He's crazy, he'll never manage it,' Mr. von Boddien says from the fundraising office at the Humboldt Box, a futuristic information center at the palace building site. And even after raising roughly €40 million, Mr. von Boddien still fields doubting questions.

"We're always asked about Plan B, in case we don't raise the money," Mr. von Boddien says, to the thud of a jackhammer outside. "There is no Plan B. We'll manage it."

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